Rejected offer of judgment does not moot TCPA claims

In a Telephone Consumer Protection Act (TCPA) case of great interest to class action attorneys—because it questions a plaintiff’s ability to represent a putative class after being offered a settlement of complete relief—the U.S. Supreme Court today held that an unaccepted settlement offer or offer of judgment does not moot a plaintiff’s case. The 6-3 decision therefore affirmed a decision entered by the U.S. Court of Appeals in San Francisco, finding that a company could be vicariously liable under the TCPA by allowing a third-party vendor to send unsolicited text messages (Campbell-Ewald Co. v Gomez, January 20, 2016, Ginsburg, R.).

TCPA class action. The putative class-action suit was brought under the Telephone Consumer Protection Act (TCPA) against Campbell-Ewald Co., a national marketing firm, and arose out of a text message sent on behalf of the U.S. Navy to recruit new sailors. The government contractor cast too wide a net in its solicitation, reaching consumers outside the Navy’s intended scope of 18- to 24-year olds. The message went to more than 100,000 recipients, including the 40-year-old plaintiff, who had never consented to receive such communications.

Offer of judgment. Campbell-Ewald contended that (1) its offer of judgment to the named plaintiff—which was rejected, but would have provided the plaintiff with complete relief—mooted the individual claim and (2) because the plaintiff failed to move for class certification before his own claim became moot, the putative class claims were moot as well. But the Supreme Court majority, affirming the Ninth Circuit, rejected these arguments. Citing basic principles of contract law, the Court reasoned that once the defendant’s offer was rejected, it had no continuing efficacy, and the controversy remained live.

The Supreme Court also held that Campbell-Ewald’s status as a federal contractor did not entitle it to derivative sovereign immunity from suit for its violation of the TCPA because the company had exceeded its authority under the contract, violating both federal law “and the Government’s explicit instructions.”

Justice Thomas concurrence. Although Justice Thomas believes the Court correctly concluded that an offer of complete relief on a claim does not render that claim moot, he claims that “the Court does not advance a sound basis for this conclusion.” Instead of resting the conclusion on modern contract law principles and a recent dissent regarding Federal Rule of Civil Procedure 68, Justice Thomas would rest “on the common-law history of tenders. That history—which led to Rule 68—demonstrates that a mere offer of the sum owed is insufficient to eliminate a court’s jurisdiction to decide the case to which the offer related.”

Chief Justice Roberts dissent. In his dissent, with whom Justices Scalia and Alito join, Chief Justice Roberts writes that, “When a plaintiff files suit seeking redress for an alleged injury, and the defendant agrees to fully redress that injury, there is no longer a case or controversy for purposes of Article III.” He reasons that “if a defendant is willing to remedy the plaintiff’s injury without forcing him to litigate, the plaintiff cannot demonstrate an injury in need of redress by the court, and the defendant’s interests are not adverse to the plaintiff.” That “is exactly what happened” in the instant action, Chief Justice Roberts claims.

Justice Alito dissent. Justice Alito penned his own dissent, writing to emphasize what he sees “as the linchpin for finding mootness in this case: There is no real dispute that Campbell would ‘make good on [its] promise to pay [the plaintiff] the money offered him if the case were dismissed.” He further stated that, “absent this fact, I would be compelled to find that the case is not moot.”

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